Business rates bill needs to be changed, says CBI

The new Business Rates Supplement Bill must be amended if local economies are not to be hit by the burden of unwanted extra taxes, the CBI has warned.

The Bill will allow local authorities to levy supplementary business taxes designed to pay for infrastructure projects.

The 2p supplement is the equivalent of a 4 per cent increase in rate bills, the CBI said. Were this to be applied throughout England then it would raise £800m for local authorities, according to Sir Michael Lyons’s 2007 review into local government.

With a 5 per cent rise in business rates already announced by the government, the additional tax would impose an unwanted tax burden on many businesses, the CBI argued.

Amendments need to be made to the Bill to ensure that it does not hamper rather than help local economies, the CBI continued.

Specifically, the CBI wants to see firms given a vote to approve or reject proposed tax supplements to pay for new infrastructure projects. This, the CBI argued, would help avoid white-elephant projects and ensure that priority is given to the projects that are most likely to help local economies, as well as avoiding extra taxes at times when business simply cannot afford them.

John Cridland, the CBI’s deputy director general, said: “The Business Rates Supplements Bill is designed to help fund projects that benefit local economies, but may back-fire in its present form. It risks placing extra burdens on firms that are fighting for survival, and could lead to more firms going bust. It also risks taxing business for projects that are not what local economies need.

“By amending the Bill to give business a vote, we can ensure that local economies get the right investments, which stimulate economic growth and create jobs, instead of threatening them.”